Launching a startup is both a leap of faith and an exercise in risk mitigation. To objectively determine you have product-market fit, you’ll need to build a minimal viable product, go to market, and get actual customers to pay. 

But you also shouldn’t take on the risk of building a product and going to market without first trying to mitigate the risk of building the wrong thing. This is where customer development comes in: it can be a way to de-risk years of product work, months of go-to-market efforts, and perhaps millions in marketing budget.

How Do You Know If You Have Product-Market Fit?

It’s difficult to know for sure, but here are some objective signals to consider:

1. Exponential organic growth, usually driven by word of mouth or referrals. If people love your product, they will happily tell their friends and peers about it.

2. A palpable increase in demand. If there’s a visible uptick of inbound inquiries; if your customers are buying your products just as fast as you can produce them, you’re doing something right. 

3. Users are signing up, willingly paying for, and deriving value from your product. If your customers are happily paying for early or exclusive access, or if they’re ready to pay without going through a trial offer—that’s PMF.

4. Your retention rate is high, meaning your customers use your product habitually and your churn rate is low. If you plot the percentage of active users over time to create a retention curve and the line flattens off at some point, there’s probably a product-market fit.

5. Objective feedback is overwhelmingly positive. Your average Net Promoter Score survey score is around 8-10. Customers say they’d be very disappointed if they could no longer use your product.

Twitch co-founder Emmett Shear said it best when he compared finding product-market fit to the myth of Sisyphus: If selling your product feels like you’re pushing a boulder uphill, you don’t have product-market fit. But if it feels like you’re chasing a boulder that’s rolling down a slope, you’re on the right track.

Customer Development: The Key to Ensuring Product-Market Fit

To increase the likelihood that what you eventually ship, and how you eventually go to market, will objectively achieve product-market fit, you need to:

• address a burning pain

• for a segment of customers

• communicate your solution effectively

• and solve it in a way customers want and expect.

The above framework comes from the product world, but closely mirrors the 4 Ps marketing framework: Product, Price, Promotion, and Place (distribution).

There are two traps founders often fall into: first, they spend a year working on the product without “getting out of the building.” Second, when they do talk to customers, they start pitching your solution and looking for validation. Customer development should be about challenging assumptions about your customer and their problems, not about hunting for confirmation of your existing assumptions. 

Another trap: thinking you can outsource customer development interviews to another leader. This video makes an elegant case for why customer development can’t be outsourced and must be personally done by the company’s founders, who have the knowledge and authority to ship a product’s next reiteration as quickly as possible.

Conducting customer development interviews is the easiest way to find out if the problems your product aims to solve actually exist in your customer’s world. Only then can you be sure that you’re moving in the right direction—and how exactly you can pivot should you need to change your course. 

Conducting a Customer Development Interview

How do you find people to interview?

Your first resource should be your personal network. Ask your family, friends, former colleagues, investors, schoolmates, incubator peers, social media connections—everyone whom you think can have some use for your product. Don’t hesitate to reach out: Unless there’s bad blood between you and the other person, the worst thing that’ll happen is they won’t read your message, and you can keep reaching out until you hear back from them.

Once you’ve asked everyone in your contacts list, it’s time to seek out your customers where they can be found—both online and offline. Lurk on online communities like Reddit and Quora–check the subreddits and posts that are related to your offering and see what people are asking. Reach out to industry thought leaders on Twitter and LinkedIn to get their perspectives. Ask your network to introduce you to more people and send cold emails if necessary. And attend events to further expand your circle: mixers, fairs, conferences.

Here’s how some of the biggest companies did it:

Plaid:

Sometimes going through your own network isn’t the right way to find customers. Here’s one example from Square:

Echoing the sentiment from the team at Plaid, Segment’s Peter Reinhardt also looked to the online communities where his potential customers spent time:

What Should You Ask During A Customer Development Interview?

Start by getting to know more about your interviewees.

• What is your role and position in the company?

• What is the company structure like and how are you involved in it?

• Tell us about a typical day at work.

• What is the average budget the company has for products or solutions like ours? Who approves the expenses?

• How and where do you find new products and services for your work? Can you try them out freely, or do you need permission?

• How much time do you typically need for [a task that your product or service helps or fulfills]?

Next, find their challenges and problems.

Ask deeper questions about their daily routine, especially about items or tasks that could be difficult, expensive, or otherwise uncomfortable. Get them to talk about the real problems and challenges they encounter or have encountered in their jobs—not feelings, personal conflicts, predictions, or future decisions.

Here are some questions you can ask:

• What are the biggest challenges in your job? Why are these the biggest challenges?

• How are you dealing with these problems? How do you think can your current solution be improved? (Ask for their current workaround so you can compare it to your product or solution.)

• If you had a magic wand that could solve your biggest problem, what would such a solution look like? (The answer could be unrealistic, and that’s okay! This question is designed to give you a better idea of what exactly they’re looking for and how you can be indispensable to them. Ask them for the underlying reasons why their magic solution is that way.)

Finally, introduce them to your solution.

You need to validate whether your assumptions about the problem and a possible solution are valid in the customer’s world. If the interviewee has not yet told you about their problem, tell what you see as the problem and what solution you have come up with for it. Find out what the customer has to say about it and try to ask more questions as possible. 

At this point, you can see if the customer is willing to pay for a solution like yours. Avoid directly asking “how much would you pay for our product?” Instead, offer early access or a free limited-time trial for a small deposit and a discounted rate, and see if they’ll bite. This is also a way for you to gather more objective feedback for product development.

Lastly, ask if your interviewee can introduce you to another person for a customer development interview.

Things to Remember for Your Customer Development Interviews

Before the Interview

• Don’t forget to record your interviews, whether they take place in person, over the phone, or via Zoom. It’s also good practice to take notes during the conversation. 

• Approach the interview with an open mind. Don’t speak over your customers and don’t jump to conclusions. And don’t think about pitching your product—this is all about learning what your customers need.

• Remember that you’re testing a hypothesis, not pitching your product. If, during the interview, you find out that the customer wants something different than you thought or it turns out that your idea is not that interesting or relevant for the intended target group, change your direction accordingly. 

• Make sure you have as many interviewees as possible. 12 is a good starting number, but it’ll be better to have more. After all, the more interviews you conduct, the more perspectives you’ll get, and the more you’ll learn from your customers. 

During the Interview

• Monitor how much you are talking. If you spend too much time asking questions or responding to everything the interviewee says, they might get uncomfortable.

• When asking about processes, have them show you what they are doing if possible. Don’t be afraid to ask, “Can you show us how you do that?”—but back off if they decline or seem uncomfortable.

• Be mindful of non-verbal cues. Smiling, nodding, and maintaining eye contact convey engagement and interest. Fidgeting, frowning, and pursing of lips indicate frustration.

• Don’t lead the witness or tell them what to say. Let them articulate their thoughts in their own words.

• Always ask them to explain their reasoning. Don’t assume you understand why they said something or did something.

• Don’t rush to the next question. Let the interviewee finish their thoughts before you begin speaking again. 

After the Interview

• Transcribe your interviews. This is a long and tedious task, and it can be hard to pick up words that are mispronounced or spoken with heavy accents. But this is necessary since transcripts preserve the integrity and accuracy of your findings. Read through your transcribed interviews carefully and annotate if necessary.

• Identify biases—preconceived notions that you or the interviewee might have—and neutralize them.

• Collate your data for easy reference. ”Chop up” your interview transcripts and place all the different answers to the same question together. This will help you identify themes, patterns, and commonalities between respondents.

Using Customer Development Interviews in Your Product Marketing or Positioning Strategy

Watch for recurring themes and issues throughout and between your interviews. This is a crucial part of your analysis. Take note of your interviewees who:

• Mentioned the same problems

• Are actively seeking solutions to their problems

• Are unhappy with the solutions they’ve found so far

• Are ready to pay for a solution like yours

Identify if your product is a “vitamin” or a “painkiller”. A “vitamin” is a product that’s nice to have but isn’t exactly a need. They’re usually features or product fixes, not core solutions. They’re optional, and you can still do without them. Meanwhile, a “painkiller” either drives more revenue or lowers current business costs—ideally without spending more. If your product is more of a vitamin, adjust your positioning so it becomes a painkiller.

You’ve already gotten your interviewees to explain their problems in their own words, so use their exact language in your messaging. Sticking to the verbiage they used will resonate better.

Now that you’ve processed your customer development interviews, what’s next?

If your assumptions were validated by your product’s users, you should aggressively move on to the next phase of product development. Congratulations!

If there are some key points in your hypothesis that need to be addressed or adjusted, make the necessary changes to your product.

If your users don’t consider your assumptions as problems, then your hypothesis is way off. You’d need to reposition your product or make major adjustments to its features—or you can stop before you waste more resources and try solving a different problem instead. Don’t feel too discouraged if this is the case. Remember that customer development is all about learning, not selling. Great products are born from frequent, insightful feedback—and the customer development process is the surest route to creating a product that’s not just wanted, but needed.